What is an escrow account and why do you maintain one for my loan?
We maintain an escrow account on your behalf to ensure that your annual expenses are paid in full and in a timely manner. Every time you make a mortgage payment, a set amount of your payment is deposited into your escrow account. We use this amount to pay your real estate taxes, hazard insurance premiums, and if applicable, your flood insurance and/or mortgage insurance premiums.
How is my monthly escrow payment calculated?
As part of the annual escrow account review, we project how much you'll need to pay your taxes and insurances, based on your taxes and/or insurance at the time of your escrow analysis. If your taxes and or insurance change during the next year, you could have a shortage or surplus in your account.
What is an escrow minimum balance?
Under Federal law, we are allowed to maintain a minimum balance or cushion of funds in your escrow account. We use this cushion as a safeguard in the event that your real estate tax and/or insurance payments increase. Unless your mortgage contract or state law specifies a lower amount, your escrow account minimum balance is equal to no more than two months escrow payments for your real estate taxes and hazard insurance. This is also equal to 1/6 of your total projected payments for real estate taxes and hazard insurance from the account. Mortgage insurance is not included in this calculation.
Why do I receive an annual escrow statement?
You receive an annual escrow statement to show the amount of taxes and/or insurance paid this past year on your behalf and what is expected to be paid next year. As part of your annual review, we ensure the escrow portion of your monthly mortgage payment is sufficient to cover your taxes and insurance. We are required under the Real Estate Settlement Procedures Act (RESPA) to disclose to you in an escrow account disclosure statement the results of this review and its effect on your monthly mortgage payment. Occasionally, we may provide you with an interim statement in order to maintain compliance with RESPA.
Why did my monthly mortgage payment change?
Changes to the escrow portion of your monthly mortgage payment are typically the result of changes in your property taxes and/or hazard insurance.
- If the loan was for a newly constructed home, the assessed amount may be different during the construction phase. The county may reflect the tax amount for the lot/land only and increase the amount due when the home is added.
What are my options for repayment if there is a shortage?
You can remit the entire shortage amount with the enclosed shortage remittance form, or you can begin making the new increased payment amount which is calculated to repay the shortage over a twelve month period.
Did you know you can pay your shortage online? Go to UmpquaBank.com/MortgageOnline to learn more.
If I pay my shortage, will my monthly mortgage payment still change?
An escrow shortage is the result of differences that occurred in the past - when the funds in your escrow account were less than what was required to cover the actual payments from your account. The escrow portion of your new monthly mortgage payment is based on projected activity for the coming year. Even if you pay your shortage, your payment may increase if your annual property tax or annual insurance premium increases.